The National Association of Broadcasters Show, was an eye-opener for this blogger, but exactly what is the “NAB Show”? To answer that question I turned to Dennis Wharton, the Senior Vice President of Communications for The NAB. (Zennie62Media NAB Show coverage sponsored by StardustBlue Media.)
The Retransmission Fee Problem
Mr. Wharton talked about a topic of conversation at The NAB Show: the non-payment of retransmission fees to content makers by cable providers. Wharton says that broadcasters sit down with cable providers and negotiate what are called carriage rights for their programming. “In this case if the content is coming from Fox Broadcasting, but they have hundreds of affiliates, local TV stations across the country. We think it’s only fair that those local TV stations – which also supplement that Fox programming with their local news and public affairs programming, emergency weather warnings – we think it’s only fair that they get compensated fairly for that valuable content. After all, local television station programming, supplemented with that network programming, is the most watched programming on television.”
Wharton says that the combination of local and network programming is watched far more than anything cable offers at present. But payment is a problem – the reason why you probably don’t know about it, is that it’s rare that a program is yanked off the air. Moreover, there are many other places a broadcaster can go, like satellite or over the air the old-fashioned way, with an antenna. YouTube’s also a player here, in that it provides an alternative for the broadcaster. (It is fair to throw in Netflix as well, especially after the success of House Of Cards.) Wharton says that broadcasters are the most watched Internet content providers. (Well, he said “Internet providers” but since broadcasters don’t provide Internet service, but make content, we have to go with the logical conclusion that he was referring to content.)
Wharton says that what the NAB wants is to have laws that protect broadcasters against piracy. “There are a lot of companies that would love to start their business on the backs of local broadcast programming, retransmitted on the Internet, and keep all the money they’re charging as part of the service. Well, that’s not how it works. There would be no incentive to provide that local broadcasting, to pay rights for NFL Football, to American Idol, to 60 Minutes. Without some adequate compensation, why would you be part of that business? You need a return on investment to sustain that business model.”
Piracy And Sports Broadcasters
If you want to read a specific example of how piracy impacts a broadcaster, read U.S. Congresswoman Maxine Waters statement before the House Judiciary Committee on December 16th, 2009, called “Piracy of Live Sports Broadcasting Over the Internet.” Here’s an excerpt, followed by a link:
The Internet, with its low barriers to entry, has provided a venue for entrepreneurs of diverse backgrounds to compete against larger businesses in a variety of industries. Social networking and video streaming sites in particular have created a virtual platform for individuals from around the world to connect, freely express themselves, and share ideas without censorship. However, sports broadcasters and others owning copyrighted material argue that the increasing resourcefulness and crafty maneuvers Internet pirates employ to avoid legal liability warrant this Committee’s attention.
In recent years, live sports broadcasts have become particularly susceptible to Internet piracy. For example, the television rights to broadcast NFL games represent some of the most lucrative and expensive rights of any American sport. As discussed in our hearing in October of this year, the league should have a top notch retirement and pension plan with the amount of money they generate in negotiating their broadcasting contracts. Yet, they and other representatives from the industry want this Committee to consider an issue that stands to cut into their profit margins.
Due to the NFL’s antitrust exemption created under the Sports Broadcasting Act of 1961, the league has been able to pool their teams’ broadcasting rights to make specific financially beneficial contracts with broadcasters. According to current NFL media rights deals, all three major American networks; CBS ($3.73 billion), Fox ($4.27 billion), and NBC ($3.6 billion), as well as cable television’s ESPN ($8.8) are paying a combined total of $20.4 billion dollars to broadcast NFL games through the 2011 season. Illegal piracy and live video streaming offer individuals who are unable to attend or afford tickets to these sporting events immediate, live, and usually free access. However, the sports and broadcast industry are concerned that continued unrestricted digital piracy will eventually impact consumers and the industry may attempt to recoup their losses by increasing ticket prices or by charging more for legitimate online access to live sporting events.
See: http://waters.house.gov/news/documentsingle.aspx?DocumentID=163012
Stay tuned.